Household Loans Surge by 7.6 Trillion Won Amid Housing Market Activity

Last month, a significant increase in mortgage loans led to the largest rise in household loans from banks in 22 months.

According to the Bank of Korea's report on 'Financial Market Trends,' as of the end of last month, the balance of household loans from deposit banks, including policy mortgage loans, reached 1,189.4 trillion won, an increase of 7.6 trillion won from the previous month. This marks the largest increase since August 2024, when it rose by 9.2 trillion won.

The balance of mortgage loans increased by 4.3 trillion won to 945 trillion won, driving the overall rise in household loans. Although there was a continued decline in jeonse (key money deposit) loans, the increase in mortgage loans was amplified by a rise in housing transactions in the metropolitan area during April and May, along with demand for interim payments on pre-sold apartments.

The balance of other loans, including credit loans, rose by 3.3 trillion won to 243.5 trillion won. The increase was fueled by growing demand for funds for stock investments, despite the write-offs of non-performing loans at the end of the quarter.

Park, a team leader at the Bank of Korea, stated, "The impact of increased housing transactions in April has led to a steady rise in housing-related loans, not just from banks but across all household loans, including non-bank institutions. Other loans also recorded an overall increase of around 8 trillion won due to rising demand for stock investment funds."

He added, "Since housing transactions are reflected in loans with a time lag, loans related to home purchases are expected to face significant upward pressure for the time being. Other loans may exhibit high volatility depending on individual stock investment situations, so it is essential to closely monitor the trends in the housing market and household loans together."

The balance of corporate loans from banks increased by 5.1 trillion won from the previous month to 1,413.4 trillion won.

Despite temporary repayments for financial ratio management at the end of the half-year, loans to large corporations increased by 3.4 trillion won due to ongoing demand for working capital for bank lending and corporate bond repayments.

In contrast, loans to small and medium-sized enterprises saw a decrease in growth from 5.4 trillion won the previous month to 1.7 trillion won, influenced by write-offs of non-performing loans and reduced lending from some specialized banks.

Corporate bonds continued to see repayment burdens due to rising interest rates, recording a net repayment of 2.9 trillion won last month, following a net repayment of 1.1 trillion won the previous month.